Question

Holders of common stock in a corporation brought an action based on state law fraud claims arising out of a tender offer for their stock. The action against the corporation and its directors was filed in state court in State A. In entering a judgment against the corporation and its directors, the state court ruled that the tender offer contained false statements of material facts. Subsequently, holders of preferred stock in the corporation filed an action in federal district court in State B against the corporation and its directors, asserting a claim regarding the tender offer based on federal law. The preferred shareholders moved for a partial summary judgment on the issue of whether the tender offer contained false statements of material facts. Both State A and State B require mutuality of parties in order for issue preclusion to apply. Should the federal court grant the partial summary judgment motion

Answer 1

Answer: No, because State A requires mutuality of parties in order for issue preclusion to apply

Explanation:

According to the information given, the federal court cannot grant the partial summary judgment motion. The reason for this is because State A requires mutuality of parties in order for issue preclusion to apply.

Under 28 U.S.C. § 1738, it's required for the federal court to give full faith and credit to the state court judgments. Therefore, in this scenario, if a subsequent action in the state is barred by the state-court judgment, then it can be deduced that it acts to bar a subsequent action in the federal court too.